The present disclosure relates to methods and systems for processing electronic documents and, more particularly, to methods and systems for processing financial instruments.
Legislation such as the Check Clearing for the 21st Century Act (also known as Check 21) has made it possible for banks and other financial institutions to process financial instruments, such as checks, by transmitting images of the checks, along with pertinent information read from the checks, electronically over networks such as the Internet. This electronic processing of digitized check images and information scanned from checks has greatly reduced check clearing process time and eliminated the need to store paper checks for extended periods or to transmit the paper checks to the drawer.
Typically, a check is received at a payee bank or other institution and is scanned to create a digital image of the check and to collect information such as the payee, amount and MICR (magnetic ink character recognition) data on the check. Such MICR data may include the bank routing number, checking account number, check number and, in some cases, the amount of the check. This electronic information is transmitted from the payee bank (the bank that receives the check and makes payment on it) or other source to the drawee bank (the bank upon whom the check is drawn). The transmitted check images may be stored temporarily, transmitted to the drawer of the check in a statement or upon request, or made available to the drawer online. The information accompanying the image is used to process or clear the check and debit the drawer's checking account. In other arrangements, the check information may be transmitted to an intermediary bank or other processing center, where it is forwarded to the payee bank for posting.
In addition to conventional checks, other financial instruments may be processed in this manner. For example, instruments such as rebate checks, traveler's checks, bonds and lottery prize payment checks may be processed electronically as well.